This paper, using data from factories and depots of KCC that handle UHT milk, develops a model for the optinal allocation of milk form factories to the depots in various parts of Kenya. In developing of this model, the paper takes into considereation the characteristics of individual depots, such as access roads, demand, storage capacities and KCC's distribution policy. By use of a case study approach, a transportation model is developed. It shows how distribution costs can be reduced through the use of operations Research (OR) modds. However, given the structure of the industry, the paper suggests that there should be an intergrated transportation model that would analyse the allocation of products to individual depots while minimising both transport and storage costs.